Obama stands firm that US will not be held ‘ransom’

US President Barack Obama stepped up pressure on Republicans Tuesday as he warned against the consequences of a possible debt default and called for an end to the federal shutdown, saying he would not let the government be held “ransom”.

US President Barack Obama on Tuesday warned against the dire consequences of a debt default, calling for an immediate end to America’s budget crisis and saying he refused to allow the nation to be held to ransom by Republicans.

"We can't make extortion routine as part of our democracy,” he told a White House press conference. “Democracy doesn't function this way. And this is not just for me. It's also for my successors in office, whatever party they're from.”

Obama said that he had told Republican House Speaker John Boehner in a phone call that he was willing to negotiate, but not under the threat of a debt default or keeping the government shut.

“My suggestion to the speaker has been and will continue to be, let’s stop the excuses, let’s take a vote in the House, let’s end this shutdown right now,” Obama said.

Non-essential federal government services were shut down last week after Congress failed to pass a budget for the 2014 fiscal year that began October 1. Hundreds of thousands of workers have since been furloughed, or sent home without pay.

Meanwhile, in a related crisis, the $16.7 trillion US debt ceiling needs to be raised by October 17, when the Treasury says it will run out of cash and lack the funds necessary to fund a chronic deficit of about $60 billion a month. Analysts fear this could trigger a disastrous global financial crisis.

But Boehner has warned that he will not allow Congress to raise the ceiling unless the president offers concessions on “Obamacare”, the president’s signature reform law that expanded health-care coverage.

US default

Obama said that, as reckless as the government shutdown is, a US default would have far worse consequences for the economy and would damage the country’s credibility worldwide.

“If Congress refuses to raise what’s called the debt ceiling, America would not be able to meet all of our financial obligations for the first time in 225 years,” the president said. He said CEOs had warned that a Republican decision to force a default would be “insane”, “catastrophic” and “chaos”, with millionaire businessman Warren Buffet likening it to “a nuclear bomb, a weapon too horrible to use”.

But Obama sought to reassure investors that the US remained good for its debts – “My message to the world is; the United States has always paid its bills and will do so again.”

He reiterated his refusal to negotiate while the budget was being used as a bargaining chip. “I’m prepared to talk about anything but …. what will not result in an actual deal is ransom-taking or hostage-taking….”

He later added, “I’m not budging when it comes to the full faith and credit of the United States. That has to be dealt with. You don’t pay a ransom, you don’t provide concessions for Congress doing its job and America paying its bills.”

He told voters, “To all the American people, I apologise that you have to go through this stuff every three months, it seems like. Lord knows, I’m tired of it.”

Reporters asked Obama about whether weekend raids against suspected terrorists in Libya and Somalia meant that America was at war forever. He said “We’re going to have to go after them” but this was not the same as war.